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5 Zacks Rank #1 Municipal Bond Mutual Funds for Steady Yield

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Debt securities will always be the natural choice of the risk-averse investor because this category of instruments provides regular income flow at low levels of risk. Income from regular dividends helps to ease the pain caused by plunging stock prices. When considering safety of capital invested, municipal bond mutual funds are second only to those investing in government securities. In addition, the interest income earned form these securities are exempt from federal taxes and in many cases from state taxes as well.

Below we will share with you 5 top rated municipal bond mutual funds . Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) as we expect these mutual funds to outperform their peers in the future. To view the Zacks Rank and past performance of all municipal bond funds, investors can click here to see the complete list of funds .

American Century California High-Yield Municipal Investor (BCHYX) seeks tax-exempted high level of current income. BCHYX invests a lion's share of its assets in municipal securities that are expected to provide income exempted from federal and California income taxes. BCHYX mainly invests in California municipal debt securities that are rated below investment grade and are expected to provide high yield. BCHYX may also invest in unrated securities. The American Century California High-Yield Municipal Investor fund is non-diversified and has returned 2% in the year-to-date frame.

BCHYX has an expense ratio of 0.50% as compared to category average of 0.86%.

RS High Income Municipal Bond A (RSHMX) invests a large chunk of its assets in municipal debt securities that provide tax free interest income. RSHMX invests in securities that pay interest which is exempted from federal income tax but may provide payments subject to the federal alternative minimum tax. The RS High Income Municipal Bond A fund has returned 2.4% in the year-to-date frame.

Douglas J. Gaylor is the fund manager and has managed RSHMX since 2014.

Nuveen Municipal Total Return Managed Accounts (NMTRX) seeks high total return through current income that is exempted from federal income taxes. NMTRX invests a major portion of its assets in municipal bonds. NMTRX may invest a maximum of half of its assets in securities that are rated below investment grade. The Nuveen Municipal Total Return Managed Accounts fund has returned 2.1% in the year-to-date frame.

As of August 2015, NMTRX held 401 issues with 1.16% of its assets invested in Narragansett R I Bay Commn Was Ref Re 5%.

USAA California Bond (USCBX) invests a large share of its assets in securities issued by the state of California that are expected to pay interest free from federal income tax and California state income tax. USCBX focuses on acquiring long-term securities. USCBX is expected to maintain dollar-weighted average maturity duration of more than 10 years. The USAA California Bond fund has returned 1.9% in the year-to-date frame.

John C. Bonnell is the fund manager and has managed USCBX since 2006.

T. Rowe Price Georgia Tax-Free Bond (GTFBX) seeks tax exempted high income. GTFBX invests a majority of its assets in bonds that provide return free from federal and Georgia state income taxes. The T. Rowe Price Georgia Tax-Free Bond fund is non-diversified and has returned 1.6% in the year-to-date frame.

GTFBX has an expense ratio of 0.53% as compared to category average of 1.00%.

To view the Zacks Rank and past performance of all municipal bond mutual funds, investors can click here to see the complete list of funds .

About Zacks Mutual Fund Rank

By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Pick the best mutual funds with the Zacks Rank.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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